1. CHAPTER ONE Marketing: Creating and Capturing Customer Value Lecturer: Emran Mohammad Mkt: 202 (Section 6 & 21) Ch 1 -0Copyright © 2011 Pearson Education

2. What Is Marketing? Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return. Ch 1 -1Copyright © 2011 Pearson Education

3. What Is Marketing? (cont) Ch 1 -2Copyright © 2011 Pearson Education

4. Understanding the Marketplace and Customer Needs States of deprivation Physical—food, clothing, warmth, safety Social—belonging and affection Individual—knowledge and self-expression Needs Form that needs take as they are shaped by culture and individual personality Wants Wants backed by buying power Demands Customer Needs, Wants, and Demands Ch 1 -3Copyright © 2011 Pearson Education

5. Understanding the Marketplace and Customer Needs  Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy its needs or wants.  Marketing myopia is the mistake (made by sellers) of paying more attention to the specific products of a company than to the benefits & experiences produced by the company Market Offerings: Products, Services and Experiences Ch 1 -4Copyright © 2011 Pearson Education

6. Understanding the Marketplace and Customer Needs Customer Value and Satisfaction Customers Value and satisfaction Marketers Set the right level of expectations Not too high or low Ch 1 -5Copyright © 2011 Pearson Education

7. Understanding the Marketplace and Customer Needs (cont) Exchange is the act of obtaining a desired object from someone by offering something in return. Marketers aim at building strong relationships by consistently delivering superior customer value. Exchanges and relationships Ch 1 -6

8. Understanding the Marketplace and Customer Needs A market is the set of actual and potential buyers of a product. Ch 1 -7Copyright © 2011 Pearson Education

9. Designing a Customer-Driven Marketing Strategy Marketing management is the art and science of choosing target markets and building profitable relationships with them.  What customers will we serve?  How can we best serve these customers? Marketing Management Ch 1 -8Copyright © 2011 Pearson Education

10. Designing a Customer-Driven Marketing Strategy (cont) Market segmentation refers to dividing the markets into segments of customers.  Target marketing refers to which segments to go after.  Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it. Selecting Customers to Serve Ch 1 -9Copyright © 2011 Pearson Education

11. Designing a Customer-Driven Marketing Strategy (cont) Why De-Market?? Shortage of supply Want to promote newer products The company is not having enough sales with the current product Ch 1 -10Copyright © 2011 Pearson Education

12. Designing a Customer-Driven Marketing Strategy (cont) Choosing a Value Proposition The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs. BMW: Ultimate Driving Machine Youtube: Provides a place for people to connect, inform and inspire around the globe. Ch 1 -11Copyright © 2011 Pearson Education

14. Designing a Customer-Driven Marketing Strategy (cont) Production concept Product concept Selling concept Marketing concept Societal concept Marketing Management Orientations (5 alternative concepts) Ch 1 -13Copyright © 2011 Pearson Education

15. Designing a Customer-Driven Marketing Strategy (cont) Production concept is the idea that consumers will favor products that are available and highly affordable. Lenovo & Haier Marketing Management Orientations Ch 1 -14Copyright © 2011 Pearson Education

16. Designing a Customer-Driven Marketing Strategy (cont) Product concept is the idea that consumers will favor products that offer the most quality, performance, and features. An organization should therefore devote its energy to making continuous product improvements. Marketing Management Orientations Ch 1 -15Copyright © 2011 Pearson Education

17. Designing a Customer-Driven Marketing Strategy Selling concept is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort. (inside-out perspective)  Blood Donations  Insurance  Highly risky due to aggressive nature of selling Marketing Management Orientations Ch 1 -16Copyright © 2011 Pearson Education

18. Designing a Customer-Driven Marketing Strategy (cont) Marketing Management Orientations Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do. (outside-in perspective) South-West Airlines Customer Service Ch 1 -17Copyright © 2011 Pearson Education

19. Designing a Customer-Driven Marketing Strategy (cont) The Selling and Marketing Concepts Contrasted Ch 1 -18Copyright © 2011 Pearson Education

20. Designing a Customer-Driven Marketing Strategy (cont) Marketing Management Orientations The societal marketing concept is the idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-term interests. e.g Ethical marketing Green marketing Ch 1 -19Copyright © 2011 Pearson Education

21. Designing a Customer-Driven Marketing Strategy (cont) Ch 1 -20Copyright © 2011 Pearson Education

22. Preparing an Integrated Marketing Plan and Program The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy. It includes product, price, promotion, and place. Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers. Ch 1 -21Copyright © 2011 Pearson Education

23. Building Customer Relationships  Customer relationship management (CRM): The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Ch 1 -22Copyright © 2011 Pearson Education

24. Building Customer Relationships Relationship Building Blocks: Customer Value and Satisfaction Customer- perceived value The difference between total customer value and total customer cost Customer satisfaction The extent to which a product’s perceived performance matches a buyer’s expectations Ch 1 -23Copyright © 2011 Pearson Education

25. Building Customer Relationships Basic Relationships Full Partnerships Ch 1 -24Copyright © 2011 Pearson Education

26. Building Customer Relationships Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers. Relating more deeply and interactively by incorporating more interactive, two way relationships through blogs, websites, online communities and social networks. The Changing Nature of Customer Relationships Ch 1 -25Copyright © 2011 Pearson Education

27. Building Customer Relationships Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Partner Relationship Management Ch 1 -26Copyright © 2011 Pearson Education

28. Building Customer Relationships  Partners inside the company refer to every function area interacting with customers:  electronically  cross-functional teams  Partners outside the company refer to how marketers connect with their suppliers, channel partners, and competitors by developing partnerships. Ch 1 -27Copyright © 2011 Pearson Education

29. Building Customer Relationships  Supply chain is a channel that stretches from raw materials to components to final products to final buyers:  Supply management  Strategic partners  Strategic alliances Partner Relationship Management Ch 1 -28Copyright © 2011 Pearson Education

30. Capturing Value from Customers  Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage.  Customer equity is the total combined customer lifetime values of all of the company’s customers. Ch 1 -29Copyright © 2011 Pearson Education

31. Capturing Value from Customers Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized. Different types of customers require different relationship management strategies. Building Customer Equity Ch 1 -30Copyright © 2011 Pearson Education

32. Capturing Value from Customers Customer Relationship Groups

33. So, What Is Marketing? Pulling It All Together Ch 1 -32Copyright © 2011 Pearson Education

34. Thank You 33